BY GAREN YEGPARIAN
Just about everyone complains about paying “too much taxes” without thinking much about what they’re really saying. Why is it too much? Compared to what? Does the complainer know the history? Do we believe in the social contract between state and citizen?
Basically, we pay taxes to enable government to provide services that the “private” sector is ill equipped to provide. We pay taxes and get roads, schools, garbage pickup, defense, social security, and a generally more equitable, healthy, and productive society.
So why, then, do people love to complain so much about paying taxes? It can’t be that it’s just a matter of not liking having money taken from us, it seems to run deeper.
I’ve compiled the accompanying table after getting lucky on the internet, getting help from an economist friend, and just doing some basic research. It’s not complete. But it does include information for the years most relevant to those alive today. It is a study in what might seem extremes, so enjoy it. Please start looking at the fifth column (MEDIAN INCOME) then go right and left from it. And note, the rates in the sixth and seventh columns are the marginal rates, i.e. the rate paid on the uppermost part of an individual’s income.
Let me point out the most salient aspects of the numbers you see. First, for clarity the “median” is not the “average.” The median is the number in the middle. So that means, using 2001 as an example, half the people in the U.S. workforce made more than $23,294 and the other half made less. My luck was finding some who had crunched data to produce what the EFFECTIVE rate on median income was from 1947 to 2006 (fourth column of table) and also added the social security tax to the calculation. The sixth column in the table is simply what the tax rate on the median income would be if the person had no adjustments to their income (an impossibility, but it is an illustrative bit of data).
You’ll notice that for the median income, this “middle person” in the U.S., tax rates have remained remarkably stable, especially the effective tax rates even when including the Social Security tax (FICA) that we pay, for the last fifty years. Why are people complaining? The federal government isn’t taking any more in tax money than it used to. In fact, you’ll notice it is taking a little less (note the 24 percent rate in the mid 1970s). But, the government is also taking less MUCH, MUCH, MUCH less from the wealthiest individuals in society. Note that the highest earners were paying 92 percent of the uppermost part of their income in 1952 and 1953, and even 94 percent in 1945! For the two decades following WWII, that rate was 90 percent or above! What is the corresponding rate now? A measly 35 percent.
So it is abundantly clear that the wealthiest among us are no longer paying what used to be considered their fair share. Just look at where that rate stood until the Reagan era, and what has happened to it since.
But that’s not all. The LATimes reported in “Support builds for a tax cut” (April 20):
“Nearly a third of all federal taxes came from corporations in 1952. Last year, they paid just 8.9 percent, according to government figures. Loopholes, credits and the ability to shelter earnings abroad have helped many of the country’s biggest companies pay far less than the corporate tax rate set into U.S. law.”
So, all the hype about tax reductions has been hollow for most U.S. taxpayers. Or, more precisely, those cherished reductions have gone only to those who least need them! The wealthiest pay less than half of what they used to and corporations about a quarter!
The result is that the government has less money, the country’s debt increases, and less service is provided to the people. Yet most of the people are paying in their fair share, just as they always have. Now, they feel ripped-off because they’re not getting as much as they used to for their taxes.
Yet, it gets better still. These points are from Paul Abrams’ piece in the Huffington Post on May 19. He looks at a ten year period. It turns out that about $300 BILLION a year in taxes goes uncollected, according to the IRS. Yet the anti-tax crazies won’t fund the IRS properly so they can catch those people cheating on their taxes. Abrams assumes only 2/3 could be collected, making it $200 billion. Then he proposes a 0.5 percent financial activities tax— “FAT” (an idea bandied about at least since the 1990s that I’m aware). He suggests reducing military expenditures by 10 percent, simply by rapidly whittling down U.S. presence Afghanistan and Iraq ($60 billion). He advocates eliminating the Bush II era tax cuts on the uppermost income bracket ($70 billion). That’s over $400 billion a year.
I’d go further and restore the tax rates to the immediate pre-Reagan period, eliminate corporate loopholes and subsidies such as the ones the oil companies get or huge agribusinesses abuse (what was meant to save family farmers from bankruptcy now costs the government billions in payments to mega-growers).
Why all this? I had to point out that the current phony-fuss about “government living within its means” or “we don’t have a revenue problem, we have a spending problem” are all just glib slogans to misdirect the average citizen and allow the continued looting of the U.S. by the richest and most powerful. It allows people to argue that public sector pensions are “too much” instead of realizing that all the monies not paid in taxes and sitting idly and uselessly in some rich guy’s or corporation’s accounts (often parked overseas), or no longer put in pension funds by corporations could be much better used to help build infrastructure or implement private sector pension programs again.
The moneyed class has become so powerful, and the rest of us so weakened, that the infighting typical of the weak is manifesting itself. This is most obvious in the pension realm (private sector workers are goaded into jealousy of public sector pension plans so they don’t ask “why don’t I have one?”). This weakens the social fabric of the country, disabling civic participation and further tightening the noose of the rich around everyone else’s lives.
In turn, this impacts Armenians in the pocketbook and creates divisions based on class within our community, weakening our ability to pursue our struggle for the liberation of Western Armenia.
Don’t fall for the right wing hype, be cognizant, advocate better tax structures.